never had a credit card -- any suggestions?

[BooneRebel]

Originally posted by: thomsbrain

Originally posted by: B00ne
Why are credit cards actually called credit cards? Technically my VISA is just a "somebody else than my bank handles my card payments and collects the money at the end of the month" card. So where is the credit part and what is this credit rating some ppl speak off?

the credit part is the part between the purchase and your payment to the company.

Credit is the guarantee that you make to someone else (say, Visa) to pay for your purchase now with the agreement that you will pay them later. The cost of this agreement is the service fee they charge the vendor for use and the interest charges that they hit you up with on your account.

Your credit rating is a valuation placed on your ability to payback a given loan, based on your previous payment history, number of accounts you have open, missed payments you've made, etc., etc., etc. Your FICA score is on a scale, I believe, from 1-850. I'd say that most people fall between 600-700 is probably average for a consumer. Over 700 and you're in really good shape (platinum card offers, etc.), and over 800 is golden. There is a catch-22 with a great credit rating, though, in that if you take advantage of it to get a loan or a new credit card, that action automatically lowers your rating. Heck, even queries by banks to check your rating (like when you apply for a loan) can adversely affect your rating by a few points.